Fund association rejects call to invoice Swedish investors

By: Jonathan Boyd | 06 Mar 2012

Thomas Eriksson, chairman and Pia Nilsson, CEO Of the Swedish Investment Fund Association have rejected a suggestion from Henrik von Sydow, chairman of the Swedish Parliament’s Committee on Taxation, for investment funds to bill investors rather than apply management fees.

In a response published today, the two argue that the suggestion cuts across the current government’s own policy of looking for simpler solutions for the Swedish funds market. Solutions are meant to make it easier for investors to identify and compare costs between funds, which von Sydow’s proposals do not, they said.

“Our view is that this would worsen the ability for investors to compare funds, quite apart from the increased level of administration that it would lead to. Management fees are deducted at a rate of 1/365th each day. How often should invoices be sent?”

They continue: “Worldwide, returns from funds are shown after all fees and costs are deducted. This means that [any] two funds’ returns can always be properly compared to each other,” they said, adding that what investors primarily want to be able to do is compare risk-adjusted returns after costs.

Eriksson and Nilsson (pictured) also point to factors around the Swedish funds industry, which mean that it is crucial to continue promoting simplicity in the way fund costs are communicated to investors, but not necessarily in the way von Sydow has suggested.

They note that investors will start to benefit this year from the introduction of Key Investor Information documents across the EU. But, it is also the case that over the past decade an increasing proportion of Swedish net savings have gone to pension funds and unit-linked products, rather that direct investments in mutual funds. Part of the process of reversing that trend lies in improving the information investors receive about costs, both in terms of fees and rebates, they said.